Abstract: Cost-effectiveness analysis (CEA) is increasingly important in health care decision making. Cost-effectiveness threshold is a critical parameter in the cost-effectiveness analysis. This review introduces the concept of cost-effectiveness threshold, summarizes its determining methods, and classifies the existing methods into two kinds according to budget constraints, then analyzes the merit and demerit of every methods. When there is a flexible budget, the methods for determining the cost-effectiveness threshold include inferring the threshold from previous decisions, comparison with other health care technology or transfer from elsewhere in the public sector, social willingness-to-pay approach, GDP per capita criteria, and rule of thumb. When there is a fixed budget, the methods for determining the cost-effectiveness threshold include shadow price approach, opportunity cost approach, and ICER threshold-searcher model. Each approach to determining threshold has its strength and weakness. The aim of this article is to introduce the existing methods and discuss the features of each method. The background information, such as the definition of threshold, is also described. The basic theory of cost-effectiveness threshold is elaborated, and we recommend the establishment of a cost-effectiveness threshold in the Chinese health care.

Key words: Cost-effectiveness threshold, Determining methods, Budget constraints, Resource allocation